Chinese investment in Africa continues despite economic slowdown

22 February 2016

The level of Chinese investment in Africa is expected to remain high in the near future, even in the current economic slowdown, according to analysts of Sino-African relations.

In December 2015, during the Johannesburg China-Africa summit, President Xi Jinping announced the assignment of US$10 billion of additional capital to the China-Africa Development Fund, US$10 billion to launch the China-Africa Industrial Fund and another US$6 billion for the China Development Bank Fund for small and medium-sized African businesses.

Lucy Corkin, a researcher at the University of London Lucy Corkin, who analysed the Chinese credit lines to Angola, said in a recent interview with The Diplomat (http://thediplomat.com/) that a careful reading of the Johannesburg Action Plan (2016-2018) and the Chinese President’s comments seem to indicate the intention to apply funds to the development of infrastructure, “the cornerstone of the China-Africa relationship,” but also to the development of industrial capacity and agricultural projects.

“The launch of the China-Africa Industrial Cooperation Fund is the formalisation of a trend, slowly gathering pace, albeit from a low base, of Chinese companies setting up assembly and production bases in Africa, as operating costs increase in industrialized eastern provinces of China,” said Corkin, author of “Management of Angola China Credit Lines “(2013).

The 2015 Africa Construction Trends report, released last week, reveals that China has eclipsed traditional Western donors, becoming the leader in the financing of the continent’s infrastructure projects and that African countries will benefit from Chinese investments in strategic areas such as infrastructure, agriculture, tourism and energy production.

Gabriel Ouko, Director at Deloitte Consulting for Infrastructure and Capital Projects, told Chinese news agency Xinhua, the Chinese economy is tending to stabilise, which “will promote trade and investment” in Africa.

“China is the largest market for products originating mainly in Africa,” said the analyst, quoted by the agency.

Mark Smith, director of Deloitte East Africa for Infrastructure and Capital Projects, told the Chinese news agency that the current economic slowdown in China would not affect the status of the country as a major financing and trade partner with Africa.

“The issue of economic slowdown in China is more a matter of perception than reality. China is growing at an average of 6-7 percent and the country’s investments in Africa and the rest of the world are still high,” he said. (macauhub/CN)

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